Date of meeting: 15 September 2021
Location: This meeting took place via video/audio link
Item 1 – Standing agenda items
4 August 2021 minutes
The group agreed the 4 August 2021 minutes, and approved their publication
Sharing information on stakeholder management
The Bank and HMT had met with the Competition Market Authority (CMA) on Monday 13 September to provide an update on the wholesale development work, and proposed next steps. The Bank and HMT will engage further with the CMA through the next phase of work, when the design of the new model is better understood. Industry will also be meeting with the CMA separately to provide them with further detail of the wholesale development work.
The Bank noted that Nick Butt provided a foreword to the summary of last year’s Volumatic “Cash After Covid” event. This discussed trends in cash usage and the work that the industry and authorities are doing to respond.
Item 2 – Progress Update
The Chair reminded members that for sensitivity/ competition reasons they should not at any stage during the discussions disclose their individual positions in terms of the business case.
Eversheds provided an update on the development work undertaken since the business case was presented to members at end-July 2021. This had focused on three areas; 1) clarifying the future governance structure for the utility; 2) cost certainty, facilitated through a clean team to validate the cost robustness presented in the business case; and 3) transition risks, which were addressed through bilateral meetings with members to address individual concerns
Clean team progress update
Eversheds reported that the additional work being undertaken by the clean team to help identify the asset selection for the utility was almost complete, and they were close to summarising the output from this. The work had carefully considered key criteria such as geographic coverage, contingency requirements and operational capacity to ensure that a utility model would be able to robustly meet future wholesale cash requirements in the UK.
Revised business case
KPMG provided a summary of the high level forecast costs for the utility, and some of the amendments that had been made following discussions with members. Costs had been updated using 2021 data and a number of revisions have been made to the coin processing charges and the ongoing fixed staff costs, where a number of incorrect assumptions had been identified.
Item 3 – Decision making process
Eversheds presented a timeline of activities which will be undertaken between now and the decision point later this year to support members’ reviewing and reporting back on their respective business cases. In terms of process it is proposed that the Bank, as chair of WDSG, will be informed of the decision by individual members to determine the overall level of support. This will be reported back to WDSG in an aggregated form, with care taken not to disclose the position of individual members.
The Bank raised that in the event there is insufficient support to further develop a utility model, then the expectation is for industry to set out an alternative way forward to deliver a sustainable and resilient wholesale cash infrastructure, supported by a competition compliant process. HMT noted that Government is committed to introducing legislation, in cooperation with the Bank, to ensure a sustainable wholesale cash infrastructure. The Bank will put in place a process for providing an update to broader stakeholders once the decision has been taken.
Item 4 – Review Action Log
Actions were reviewed and closed where applicable.
Item 5 – AOB
Bank of England: Sarah John (Chair), Nick Butt, Elisabeth Bertalanffy-Fournier, Ronan McClintock, James Best, Molly Galligan
Eversheds: Ros Kellaway, Trystan Richards, Russell Saunders, Mark McLintock
KPMG: Chris Barnes
Barclays: Tim Allen
HSBC: Sue Yarham
Lloyds Banking Group: Martin Barrett
Post Office: Russell Hancock
Natwest: Richard Talbot
Santander UK: Robert White
HM Treasury: Azin Roussos, Abigail White
Virgin Money: Derek Walker
G4S: Paul Van Der Knapp
Vaultex: Phil Vaughan
Paul Pugh (Eversheds), Simon Walker (KPMG), Kevin McMullan (Danske), Anne Jessopp (TRM), Julie Fitzgibbon (BOI), John Garrett (AIB)